Fees increase leaves parents short of funds

Parents may be forced to rethink their retirement plans because they have failed to save towards the cost of sending their child to university, research claimed today.

Four out of 10 parents said they had not set aside any money to pay for a university education for their offspring, according to The Children's Mutual savings group.

Yet 26% of potential students say they are relying on their parents to pay their tuition fees, which will cost £3,000 a year from 2006.

One in four students said they would be forced to borrow the money they needed from the bank, while 7% said they thought the rise in fees from their current level of £1,000 would mean they could not afford to go to university, according to a survey of 750 parents and 750 students.

According to The Children's Mutual, tuition fees currently account for just over 10% of the current annual cost of going to university, with living expenses pushing the total cost up to £8,584 a year, rising to £10,186 in London.

The group warned that many parents who had failed to put money aside to cover the cost of university might find themselves unable to top up their pensions or pay off their mortgage early.

David White, chief executive of The Children's Mutual, said: "Parents don't want to see their children in debt, but many have left it too late to help, unless they go into debt themselves."

Research for the Association of Investment Trust Companies (AITC) found that just under a third of parents were prepared to abandon plans for early retirement to see their children through university, while 45% would go without a new car.

The same proportion would miss out on a holiday and just under half would go without a bigger house.

It also found that both students and parents were underestimating the cost of university, with 33% of parents and 47% of students expecting to leave university with debts of less than £6,000 - half the actual figure of around £12,000.

Around two-thirds of students expect their parents to finance them through university, although the same proportion of parents admitted they had inadequate savings to do so.